Developers are frequently asked to pay financial contributions towards infrastructure upgrades required as a result of their development. There have been interesting decisions recently on reviewing the amount of contributions payable, and on repayment of contributions already paid.
Legal Agreements
Generally payment of the developer contribution is secured through a legal agreement. Ideally, the agreement should specify that the contribution must be used by the local authority for the identified purpose. Agreements often include a provision allowing the local authority to retain the sums for a specific period, subject to repayment if the local authority does not then use the entire contribution.
The form of agreement can have implications for the ability to amend the sums payable, and for repayment of sums paid.
Section 75 Agreements
Section 75 Agreements can be amended following a Section75A application in terms of the Town and Country Planning (Scotland) Act 1997. A Section 75A application may be submitted immediately after the relevant Section 75 agreement has been completed, unlike England.
Fife Council recently approved a S75A application, resulting in a 50% reduction in an education contribution. The application was supported by evidence that half the number of classrooms was required than had initially been assessed. An element of double-counting in the Housing Land Audit was also identified by the S75A applicant.
Section 69 Agreements
An alternative form of agreement is in terms of Section 69 of the Local Government (Scotland) Act 1973. This is often used where a single payment of an infrastructure contribution is required.
There are few court cases relating to the reduction or refund of planning contributions. One developer sued for return of an amount paid in terms of a Section 69 Agreement. The Sheriff took a "commercially sensible" approach, interpreting the agreement by reference to contract law. She decided that, as not all of the contribution had been used for the specified purpose within the specified period, around half the sum sued for should be repaid by the local authority
No Agreement?
Some local authorities simply require payment of the due amount before the planning permission decision notice is issued. In those circumstances the only means of recovering any such payment may be by recourse to the courts. This was demonstrated by a recent refusal of an application by the Scottish Government Planning and Environmental Appeals Division, on the basis that the DPEA had no remit.
What to do?
Before agreeing to payment of any contribution, a developer should consider the circumstances carefully. The pressing need to obtain planning permission may not outweigh the potential benefit of having an appropriate planning agreement in place, should circumstances change.
Seek specialist planning law advice if you consider that the amount of an existing contribution should be reduced or removed altogether.
